The Code On Social Security - 2019

  • Recently, the Code on Social Security, which is the last of the four labour codes, was introduced in Lok Sabha.
  • It proposes universalisation of social security benefits for the country’s around 50 crore workforce, along with offerings such as medical, pension, death and disability benefits to them.

Aim

  • It seeks to amend and consolidate laws relating to the social security of employees, subsuming eight Central laws.

Eight Central Labour Laws

  • Employees' Compensation Act, 1923; Employees State Insurance Act, 1948, Employees Provident Funds and Miscellaneous Provisions Act, 1952; Maternity Benefit Act, 1961; Payment of Gratuity Act, 1972; Cine Workers Welfare Fund Act, 1981; Building and Other Construction Workers Cess Act, 1996 and Unorganised Workers Social Security Act, 2008, are to be subsumed under the new law.

Need

  • The unorganised sector, which accounts for a little over 80 per cent of India’s total workforce, has largely been out of social security schemes as well as the ambit of labour regulations at present.

Key Features

Social Security to Unorganised Workers

  • Under the Code, the central government may notify various social security schemes for the benefit of unorganised workers. These include an Employees’ Provident Fund (EPF) Scheme, an Employees’ Pension Scheme (EPS), and an Employees’ Deposit Linked Insurance (EDLI) Scheme. 

Corporatization of EPFO and ESIC

  • The pension, insurance and retirement saving bodies including Employee Provident Fund Organisation (EPFO) and Employees State Insurance Corporation (ESIC), will be body corporate.

Different Applicability Thresholds

  • The Code specifies different applicability thresholds for the schemes. For example, the EPF Scheme will apply to establishments with 20 or more employees.  The ESI Scheme will apply to certain establishments with 10 or more employees, and to all establishments which carry out hazardous or life-threatening work notified by the central government. 

Social Security Organisations

  • The Code provides for the establishment of several bodies to administer the social security schemes. These include:

    (i) a Central Board of Trustees, headed by the Central Provident Fund Commissioner, to administer the EPF, EPS and EDLI Schemes,

    (ii) an Employees State Insurance Corporation, headed by a Chairperson appointed by the central government, to administer the ESI Scheme,

    (iii) National and state-level Social Security Boards, headed by the central and state Ministers for Labour and Employment, respectively, to administer schemes for unorganised workers, and

    (iv) State-level Building Worker’s Welfare Boards, headed by a Chairperson nominated by the state government, to administer schemes for building workers.

Social Security Fund

  • It proposes to set up a social security fund using the funds available under corporate social responsibility (CSR), to provide welfare benefits such as pensions and death and disability benefits.
  • It also has a clause to make fixed-term contract workers eligible for gratuity after one year in place of the existing five years.

Benefits for Gig Workers

  • It empowers the government to frame schemes for providing social security to gig workers and platform workers who do not fall under the traditional employer-employee relation.

Maternity Benefits

  • It mandates to provide maternity benefit to the woman employees and compensation to the employees in case of the accidents while commuting from residence to place of work and vice-versa.

Special Purpose Vehicles

  • The Code also provides an enabling provision for constituting special purpose vehicles for the implementation of schemes for unorganised sector workers.

Inspections and Appeals Provisions

  • The appropriate government may appoint Inspector-cum-facilitators to inspect establishments covered by the Code, and advise employers and employees on compliance with the Code. Administrative authorities may be appointed under the various schemes to hear appeals under the Code.
  • It also specifies judicial bodies which may hear appeals from the orders of the administrative authorities. For example, industrial tribunals (constituted under the Industrial Disputes Act, 1947) will hear disputes under the EPF Scheme.

Offences and Penalties Provisions

  • The Code specifies penalties for various offences, such as: the failure by an employer to pay contributions under the Code after deducting the employee’s share, punishable with imprisonment between one and three years, and fine of one lakh rupees, and falsification of reports, punishable with imprisonment of up to six months.

Impact

  • Transparency and Accountability: The codification will make the existing labour laws in sync with the emerging economic scenario; reduce the complexity by providing uniform definitions and reduction in multiple authorities under various Acts and bring transparency and accountability in enforcement of labour laws.
  • Boost to Labour Intensive Industries: This in turn would lead to ease of compliance, catalyzing the setting up of manufacturing units including boosting Labour intensive industries such as agriculture and manufacturing exports.
  • Employment and Formalisation: The code will ultimately lead to enhancement in employment opportunities as well as its formalisation along with ensuring safety, social security and welfare of workers.

Criticism

  • The Bill fails to appreciate that provision of meaningful social security on such a massive scale is beyond the capacity of any single ministry at any single level of government, and that social security has to be fundamentally rethought, instead of creating a patchwork drawn from different extant laws.
  • The code being hyped as ‘Universal’ is being criticized on the groundof the “lack of universal character” as the existing thresholds for applicability of Provident Fund, Employee’s State Insurance , gratuity, maternity benefits etc., have not been removed.
  • The Code does not stipulate anything for sector specific social security schemes, making the huge workforce totally out of any social security arrangements.
  • The cess-related Act has been claimed to be subsumed by the code. But it remained absolutely silent about the management of the fund collected from the cess. On the social security benefits for construction workers, certain heads of social security benefits have been mentioned but on the details of the benefits, entitlement, calculation, mode of delivery,, the code remained absolutely silent leaving them totally at the disposal of state-level boards.

Way Forward

  • All in all, the SS Code lays out an array of wishful benefits, but there is no firm commitment in the provisions to actually provide them. What should have been spelt out as binding legislation which actually compels the government to provide the benefitsis left to the whims and fancies of executive power of the Central government.
  • Therefore, it is essential to rethink social security from top to bottom. It should be envisaged holistically, its different components delegated to different arms and agencies of the government at all levels, for the successful implementation of the Code across the country.

Source : Civil Services Chronicle Online, December, 2019